Morgan Stanley rides trading desk to strong third quarter

Morgan Stanley Q3 profit jumps 26% on trading boost

Investors expect Democrats to take control of the White House and Senate in the November 3 election, according to Morgan Stanley Chief Financial Officer Jonathan Pruzan. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.26 per share. Fixed-income revenue, Morgan Stanley said, registered at £1.49 billion.

Morgan Stanley Chief Government James Gorman has spent billions in latest months to make the megabank much less reliant on buying and selling, however Morgan Stanley's merchants bucked the pandemic to ship a giant quarter.

Net income rose 25% to $2.72 billion.

Morgan Stanley rounded out third-quarter earnings reports from the nation's big banks, which have weathered the pandemic better than numerous clients they serve. The results blew past the expectations of analysts, who had predicted $1.28 a share on revenue of $10.65 billion. Its trading operation - helping clients chop and change their portfolios - was responsible for the lion's share of the outperformance, bringing in nearly half a billion dollars more than expected.

"For a decade now, we've been rebuilding Morgan Stanley from the depths of the crisis to a position to withstand whatever comes our way", Mr. Gorman said Thursday.

Strong growth of 20% in sales and trading revenue helped boost earnings as the firm benefited from strong client engagement across a number of its products.

"In a typical election season, you would see volatility increasing into the election and then subsiding", Pruzan said. A new round of federal spending - particularly more unemployment insurance and checks to households - would stave off future loan defaults.

E*Trade's roughly $700 million in quarterly revenue wasn't included in Morgan Stanley's results because the deal was completed at the start of the fourth quarter.

Even as trading returned to the spotlight, CEO James Gorman has been beefing up the company's asset and wealth management businesses to shield the bank from volatility in its trading and investment banking businesses. The Eaton Vance acquisition is expected to wrap up in the middle of next year.

The bank's wealth management arm also turned in a solid quarter with a 7% jump in revenue to $4.66bn.

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